Palm Beach gets insurance money after kickback scandal

Sep 23, 2012

The following article was published in The Palm Beach Daily News on September 23, 2012:

Town gets insurance money after kickback scandal

By Michele Dargan

The town has received nearly $400,000 in insurance reimbursement for losses the town says it suffered as a result of former construction manager Steven White’s overpricing town jobs to outside contractors and receiving kickbacks from them.

Travelers insurance accepted $493,947.94 of the $532,197.10 claim submitted in April 2010, after determining that six checks were not part of the claim, said Karen Temme, the town’s risk manager.

Minus the $100,000 deductible, Travelers insurance paid the town a total of $393,947.94 for an “employee dishonesty claim” covered under the town’s insurance.

White, 57, was charged with using his position with the town to award emergency construction contracts and pocketing nearly $250,000 in bribes from contractors at Dee Griffin Earthworks and Chaz Equipment between January 2008 and March 2010.

According to the documents submitted to Travelers, the town claimed $247,486.05 for the amount White received as 50 percent compensation for the overpricing of projects by various contractors from Jan. 1, 2008, to March 1, 2010. The town claimed another $247, 486.05 as the 50 percent split that White gave to the contractors with whom he split the overcharges during the same period. The town also claimed an additional $37,225 for overcharging jobs related to emergency repair work on Tangier Avenue.

Upon notification of the claim, Travelers canceled the town’s policy, Temme said.

“The town has since changed insurance carriers to United States Fire Insurance Co.,” Temme said via email. “The premium increased from $4,528 in fiscal year 2010 to $12,832 in fiscal year 2011.”

White accepted a plea agreement in May, pleading guilty to two counts of unlawful compensation or reward for official behavior. The maximum sentence would have been 15 years on each count.

Under the agreement, White would receive 3½ years in prison in exchange for his truthful testimony in the case against Gary Czajkowski, owner of Chaz Construction. In May, White was sentenced to 30 years, but the sentence was reduced in July to 3½ years after he testified by deposition. Czajkowski’s trial is set for February. White is housed in the South Florida Reception Center in Doral, according to the Florida Department of Corrections website.

Town Manager Peter Elwell confirmed the payment of insurance money and confirmed that the insurance claims were made based on the probable cause affidavits. Elwell, however, declined to comment further because of Czajkowski’s upcoming trial, for which he and town staffers are listed as possible witnesses.

White’s attorney, Jan Peter Weiss, said that according to the plea agreement, White was not required to pay restitution to the town.

“Restitution was not a requirement of the plea agreement when he pled guilty on both charges,” Weiss said. “Based on that, he’s not liable to the town for any damages.”

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